Most ordinary citizens don’t seem to have realised we pay the highest taxes in the universe.

We should not accept PAP’s conveniently narrow definition of tax which should include any amount which contributes to government revenue.

I will use the example of an ordinary Singaporean couple with 2 children, each earning $40000 a year and highlight all the different taxes they have to pay. For ease of computation, I have assumed generous personal reliefs of $10,000 and a $8000 CPF deduction each.

Direct taxes need no explanation. Their personal income tax is negligible. It looks like a happy situation only because we have yet to take into account all other taxes.

Indirect taxes are GST, COE, FDW levy, etc The couple is likely to have a car, employ a maid and has little or no savings in high-cost Singapore. Assuming a $50000 COE, it works out to a $5000 annual indirect tax. Concessionary maid levy at $60 per month works out to $720 annually. Assuming an annual expenditure of $40000, GST at 7% works out to $2800. Total annual indirect taxes = $5000 + $720 + $2800 = $8520

With car and maid (A) Without car and maid (B)

Type of Tax $ Type of Tax $
Income Tax 0 Income Tax 0
Indirect Tax . Indirect Tax .
Coe per year 5000 GST 2800
Maid levy 720 Sub total 2800
GST 2800
Sub total 8520  

The effective tax rate (on dual incomes) is 19% and 6% for A and B respectively. Low tax rates??

3 Double tax. Singapore is about the only country that levies GST on water conservation tax. While this may be negligible on an individual basis, the government has profited millions over more than 2 decades from residents and businesses.

4 Housing tax. In a 2009 TOC article, the total construction cost of a 4-room BTO in Punggol was estimated to be about $120,000. Since the average selling price was $293,000, the government made a $173,000 profit from buyers by including the land cost. Divide this by the 99-year lease, it works out to $1747 a year.

HDB buyers also have to pay mortgage interests on this amount which works out to about $73,000 at 3% over a 25-year loan. calculator

(It is unethical of PAP to include a land cost component in pricing HDB flats because the the government remains the owner while HDB ‘owners’ are in fact only tenants. This amount is channeled back into government revenue. which makes it a form of tax.)

(A) (B)

Type of Tax $ Type of Tax $
Income Tax 0 Income Tax 0
Indirect Tax . Indirect Tax .
Coe per year 5000 GST 2800
Maid levy 720 Double Tax 0
GST 2800 Housing Tax 1747
Double Tax 0 Mortgage int. 737
Housing Tax 1747 Sub total 5484
Mortgage int 737
Sub total 11004  

Effective tax rates for (A) and (B) are 25% and 12.5%. Low taxes?

5 Unique tax. The PAP creams off, on average, 3% from our CPF returns to supplement the budget. The amount one loses depends on how much CPF one has. Singles staying with parents who have, say, $200,000 in CPF OA are contributing $6000 a year to government revenue.

It’s not possible to list all the different taxes such as road tax, petrol and cigarette duties, etc. In reality our effective tax rates are much higher for ordinary wages. Also, not everyone pays maid levy at a concessionary rate of $60, eg employers who do not have children below 16 years old (previously 12).

According to propaganda, Singaporeans are paying comparatively low taxes. However, if all the different taxes are added up, the tax rate for ordinary citizens could be as high as 30% of wages. You can work out your personal effective tax rate which will convince you the government has been pulling a fast one on us. We should stop deluding ourselves. Time to wake up.

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